Suppose a Chinese Citizen Buys a Box of Nestlé Kit

question 136

Multiple Choice

Suppose a Chinese citizen buys a box of Nestlé Kit Kat candy bars from America and Nestlé decides to hold on to the Chinese currency. How will this transaction enter into the U.S. balance of payments?

• A) as an increase in current account, as a decrease in capital account
• B) as a decrease in current account, as an increase in capital account
• C) as an increase in current account, as an increase in capital account
• D) as a decrease in current account, as a decrease in capital account
• E) There will be no net change in current account or capital account.

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Definitions:

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